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If you think that landlords have little to do after the first of each month, when they make their rounds to collect rent checks, think again. Harry Norton II, 39, of Pembroke Pines, Florida, says that he always sits down with prospective tenants before offering a lease. “I explain what I expect from them and what they can expect from me. That gets the relationship started on the right foot.”
Tenants can expect Norton, an entrepreneur and professional real estate investor who puts on “boot camp” seminars for landlords, to come by every month or two, in order to see if the property is being maintained. In exchange, Norton expects tenants to tell him about little problems, such as faulty electrical sockets, before they become big problems.
“I live by the cell phone,” says Victor Gulley, 34, who owns three rental properties in Illinois and one in Indiana. Gulley also has a full-time job at Blue Cross and Blue Shield. “I try to do what I have to do right away. Otherwise, I might get busy with some other urgent problem and the first call gets overlooked.”
Gulley, whose day job is in technology support, has learned to adapt to the needs of individual tenants. “One of my tenants called recently to report a problem with the gutters on the side of the house,” he says. “This tenant is a contractor who is willing to do some home repair himself, so I told him to go ahead. He’ll provide me with receipts for the materials he needs to buy, which he’ll deduct from his rent.”
Being a landlord is definitely an ongoing commitment, but it does not have to be another full-time job. “If you have the right systems in place and you have only one or two rental properties, it shouldn’t take more than five to 10 hours a month,” says Pierre Dunagan, president of the Dunagan Group, a financial services firm in Chicago. Putting the right systems in place is key to living the life of a landlord — and having a life, too.
Build a firm foundation. The earlier you put this system in place, the better. “It’s worth paying for a home inspection before you buy a property,” says Bob Cain, publisher of Rental Property Reporter newsletter. “Know what you’re buying and how it fits into your plans. If you expect to keep the property for, say, five years, don’t buy a house that will need a new roof, a heating system, or work on the foundation. Those can be very expensive.” On the other hand, says Cain, who runs the www.rentalprop.com Website, if you have long-term plans for the property, expect that you may need to replace the roof, the furnace, water heaters, or repaint at some point.
“If you purchase a place as a fixer-upper,” says Dunagan, “get it fixed up all at once, even if you have to take out an acquisition and rehab loan. You don’t want to rent out a property that still needs a great deal